Question

United Parcel Service, Inc. (UPS) says in its first footnote that:“it was founded in 1907 as a private messenger and delivery service in Seattle, Washington. Today, we are the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry and the premier provider of global supply chain management solutions. The global market for these services includes transportation, distribution, contract logistics, ground freight, ocean freight, air freight, customs brokerage, insurance and financing. We operate one of the largest airlines in the world, as well as the world’s largest fleet of alternative-powered vehicles. We deliver packages each business day for 1.6 million shipping customers to 9.9 million delivery customers in over 220 countries and territories. In 2019, we delivered an average of 21.9 million pieces per day, or a total of 5.5 billion packages.”

Below you will see SOME (not all!) of UPS’ transactions in their most recent fiscal year. Provide the journal entry or entries (accounts and amounts) needed to record each transaction.  

1. Issued new common stock for $218 million.

Account Title	Debit	Credit

2. Paid $38,908 million cash for current period wages.

Account Title	Debit	Credit

3. Purchased new equipment costing $6,380 million on account during the current period.  

Account Title	Debit	Credit

4. Paid $2,146 million cash for current period interest expense on the loans.

Account Title	Debit	Credit

5. Paid $28,600 million cash for current period operating expenses.

Account Title	Debit	Credit

6. Based on the journal entries you’ve prepared, calculate UPS’ Net Income.  SHOW YOUR WORK.

UPS’ Net Income

=

7. At the beginning of the period, UPS had a Cash balance of $4,225 million. Use this beginning balance and your journal entries to show what UPS’ Cash T account would look like for the most recent period and calculate UPS’ ending Cash balance. SHOW YOUR WORK.

Cash			UPS’ Ending Cash Balance	=

Answer 1

Journal Entries in the book of United Parcel Service Inc in millions Debit Accounts Ref. Credit $ 218 Cash Common Stock issued common stock for cash $ 218 $ 38,908 Wages cash Paid wages in cash $ 38,908 $ 6,380 Equipment Accounts Payable Purchased new equipment on account $ 6,380 $ 2,146 Interest Expense Cash Paid interest for the current period $ 2,146 $ 28,600 Operating Expense Cash Paid operating expense for the current period $ 28,600 Based on the journal entries . Calculation of Net Income Particulars Amount in million $ dollars Net income Total 0 Expenses: Wages Interest Operating Expense 38908 2146 28600 Total 69654 Net Income (69,654.00) Please note that the calculation is as per journal entries as there is no entries passed for income , income is assumed to be zero

Calculation of Closing Cash Balance Particulars Amount in million $ dollars Opening Balance (A) 4225 Cash Inflow: (B) Issue of common stock 218 Total 218 Cash Outflow: (C) Wages Interest Operating Expense 38908 2146 28600 Total 69654 Closing Cash Balance (A+B-C) (65,211.00) I think that there is a mistake in the question I assume that the income is not provided here , So due to lack of that information the cash balance is negative Please comment on the answer if there is any missing information, if any